Question

Where does sales returns and allowances go on a multi step income statement

Answer 1

Ans:

1.In the multi step income statement, In the sales revenue section, sales returns and allowances are substracted as a deductions from the gross sales.

2. In order to get the net sale proceeds, sales returns and allowances are substracted from the gross sales in the income statement.

3. Sales returns occur when the customer returns the undesirable products, such as damaged goods, quality less goods, etc. to the seller.

4. Sales allowance is a reduction in the price charged by the seller, due to a problem with the sold product, such as a quality problem, or an incorrect price.

5. Example:

Company A sold $10,000 worth of goods and customers returned $1000 worth of goods.

Income statement:

Particulars	Amount(in $)
Sales revenue	$10,000
Less: Sales returns and allowances	($1,000)
Net sales	$9,000

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